The present invention relates generally to operating direct marketing environments that blend direct response advertising with content (“on-line communities”) using a computer network in conjunction with an extensible information publishing architecture.
The Internet is a global computer network based on a non-proprietary group of technologies (e.g., TCP/IP, e-mail, HTML) that collectively serve as an important tool for gaining access to information on a wide variety of subjects. With the proliferation of computers in business as well as personal contexts, the Internet has become an attractive medium for commercial enterprises.
Internet companies typically publish information, sell goods, provide services, or engage in some combination thereof. Internet companies generate revenue in one of four ways. First, they can sell subscriptions or usage fees (e.g., customers can pay a fee to receive or access information). Second, they can sell advertising. Third, they can sell their own goods and/or services. Fourth, they can sell goods and/or services developed by other companies and receive commissions. The third and fourth methods of generating revenue are collectively referred to as “e-commerce” in the Internet vernacular.
The sources of revenue discussed above—subscriptions, advertising, and e-commerce—are sound at their most basic level. However, few Internet companies have been able to profit from them. This high rate of failure stems from a deep-rooted fatal flaw—over-reliance on the World Wide Web (the “Web”), particularly with respect to the development and implementation of on-line communities.
The Web consists of a vast network of interconnected electronic pages, which can contain formatted text, graphics, photographs, sound, movies, and animation. The feature that sets the Web apart from other forms of media is the hypertext link. Hypertext links, which appear most often on a Web page as buttons or underlined text, allow users to jump from one Web page to another one by simply clicking on them with a computer mouse or other input device.
Despite a few success stories, most attempts to transform Web sites into on-line communities have failed for several reasons. First, the Web is not yet an effective medium for advertising. Internet companies derive a large percentage of their advertising revenue from Web banners, which are billboard-like images with embedded hypertext links that are placed on the top, bottom, and sides of Web pages. Unlike the print, radio, and television advertisements that have become a staple of our society, Web banners have declined in perceived value over the years. Many advertisers have criticized Web banners as being overpriced and ineffective.
Second, to combat falling Web banner prices, many companies have attempted to transform Web banners into a form of direct marketing. To provide the kind of targeting required for direct marketing, however, those companies must implement expensive and complex technology that matches on-line information with so-called “off-line information,” such as name, address and other date. Thus far, efforts to transform Web banners into a direct response medium have met with stiff resistance from privacy groups and even politicians. The privacy problem stems from the fact that this form of direct marketing occurs without the consent or knowledge of the people at whom the advertising is directed.
Third, the Web is not an inherently interactive medium with respect to one-to-one and many-to-many communication, two of the hallmarks of successful on-line communities (the other being one-to-many communication). Internet companies have correctly focused their attention on the concept of “community,” but they have dropped the ball with respect to implementation. They mistakenly believe that by adding interactive elements (primarily bulletin boards) to their Web sites, people will congregate and form communities. The Web was originally designed as a way to publish complex documents and allow people to access and navigate through those documents quickly and easily. The Web was not designed to accommodate the exchange of information throughout the day by many different people, most of whom are not employed by the owner of a given Web site.
Fourth, the Web is a passive medium. Companies that rely heavily on the Web must wait passively for patrons to return to their bulletin boards. A patron who never returns ceases to be a patron. Some companies have begun sending reminder e-mail messages to their patrons, but because these companies rely so heavily on the Web, they cannot get away with sending such reminders very often.
Fifth, the Web has led many companies astray from their purported goal of developing on-line communities. Thanks to the Web's robust technical environment, some Internet companies act more like technology companies than media companies. They become fixated on extending the Web's capabilities and lose sight of the fact that technology is a means to an end and not an end in itself. Other Internet companies act more like traditional publishers than interactive media pioneers because of the Web's strength as a one-to-many publishing platform. They create or purchase 95% or more of the material they publish and neglect the development of member-generated content, which is so crucial to a successful on-line community. The failings of the companies involved in this dichotomy stem from the same cause—a failure to put into place the infrastructure, rules, incentives and management needed to foster the development of real on-line communities.